Comfort Pension Level

Triumph13

PasturesNew wrote: »

Out of interest, if state pension is £7,500 and so you'd need £7,500 to make it up to £15k/year .... how much would one need to be "in the pot" to generate that?

Somewhere between £180,000 and £250,000 depending on whether you think a sustainable withdrawal rate would be 4% or 3%

PasturesNew

Triumph13 wrote: »

Somewhere between £180,000 and £250,000 depending on whether you think a sustainable withdrawal rate would be 4% or 3%

Even if I worked full-time for the rest of my working life and wasn't taxed a penny and managed to put away every penny I earnt ... it'd be tough to get that much into the pot.

Triumph13

It's the kind of number you end up with if you contribute 8% of an average wage over a full working life of about 45 years if you assume a real return of 3% to 4% pa on investments. When auto enrolment is fully up and running it should be an average kind of number. For anyone on a lower wage though, or with breaks in their earnings, it will be incredibly hard to get anywhere near that.
It does emphasise the need to start saving for retirement from day one.

N1AK

PasturesNew wrote: »

Even if I worked full-time for the rest of my working life and wasn't taxed a penny and managed to put away every penny I earnt ... it'd be tough to get that much into the pot.

I'm sure it would be hard for the vast majority of people who haven't started by their late 40s (I don't know your age so apologies if you are younger than that). That doesn't mean you wouldn't benefit from a smaller amount. Someone on £9k in retirement will have a much better time than someone on £7.5k.

Also if you pay tax then there are considerable advantages to a pension even when close to retirement. You can contribute money you would otherwise be taxed on and get the tax back, even without an employer contribution that increases the money by 20%. Then when you retire you can get 25% back tax free and the rest won't take your income over the tax threshold meaning it'll be tax free as well.

Cyberman60

atush wrote: »

10K per year wont even cover the mooring and maintenance for said yacht

Ah, but a percentage of the 400K equity in my house will, after downsizing. I don't see the point in not spending some of that in my retirement. Incidentally, if you have more than 23.5K in savings/assets you have to pay all of your own care-home fees. That's another reason to spend as much as you can before the inevitable happens.

Also, of course I will get an extra 5K or so a year from the state pension in 7 years time.

atush

I dont know about you, but I WANT to pay some of my care home fees.

Because I don't want the cheapest home the council can find, but a decent one.

AlwaysLearnin

Triumph13 wrote: »

It's the kind of number you end up with if you contribute 8% of an average wage over a full working life of about 45 years if you assume a real return of 3% to 4% pa on investments. When auto enrolment is fully up and running it should be an average kind of number. For anyone on a lower wage though, or with breaks in their earnings, it will be incredibly hard to get anywhere near that.
It does emphasise the need to start saving for retirement from day one.

It also demonstrates what a good deal the state pension can be, especially for lower earners!

atush wrote: »

I dont know about you, but I WANT to pay some of my care home fees.

Because I don't want the cheapest home the council can find, but a decent one.

I'd prefer not to need the care...

Moby

Freecall wrote: »

I don’t want to put too much of a downer on this but without even thinking about it the following does not seem unreasonable (in very round figures) :

Council Tax £2k
Power and water £2k
Insurance/phone/internet other fixed costs £1k
Car (12000 miles at 40p) £4.8k

That’s £10k of the £15k gone and we haven’t even started to eat yet let alone clothe, entertain etc.

And what about replacement of home appliances? At 55 how many washing machines, cookers, dishwashers, fridges, TV’s, beds, sofa’s etc are you likely to need to replace. I bet most people have at least a dozen of these big ticket items with an average life expectancy meaning that between one and two will need replacing every year.

And this all assumes that you have a fairly basic lifestyle. Certainly no holidays or the like.

I think that most people underestimate their true cost of living. The only way for any individual to know for sure is to look at their total take home pay for say the past 5 years, subtract what savings have been put away and realise that the rest has been spent on maintaining their lifestyle.

That is how much you need.

Yes you can tinker around the edges and might give up a couple of things at retirement but costs will go up elsewhere.

Remember, any reduction in disposable income comes off the nice bits first. Ultimately you can’t do much about Council tax etc.

I don’t want to depress people but unless you have experience of living on £15k for years before, I think that adapting to such an income would be very difficult.

I've kept a record of my outgoings for the last 10 years or so and recently averaged out my spending. The following figures are for me only.......not a couple.
My average monthly spend for my half on utilities is £65 gas/elec, £35 cable, £86 Council Tax, £300 mortgage. Everything else food, clothes, insurances, car etc added to the above has averaged out at about £1115 a month over the years. £1115 x 12 = 13 376 estimated living expenses for a year. As I said this is my half....so as a couple we would double this to about 26k a year. This is in London suburbs.

atush

I'd prefer not to need the care...

Stating the obv but true. However the poster who I was replying too wanted to keep his cash under the 23K threshold so he didn't have to pay.

Cyberman60

atush wrote: »

I dont know about you, but I WANT to pay some of my care home fees.

Because I don't want the cheapest home the council can find, but a decent one.

Personally, I'd rather go down in my yacht than be in a care home. Paying for an expensive care home is no guarantee of being afforded better dignity and respect unfortunately.